Dave Ramsey’s Guide Budgeting - Crossroads of Faith

Dave Ramsey¡¯s

Guide

Budgeting

Contents

Introduction

How to Make

a Budget

3

5

Using the

Envelope

System

Paycheck

Frequency

9

11

Families and

Budgets

You Make It

All Work

14

17

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Introduction

Congratulations! You¡¯ve already started.

Started? You may be thinking. What do you mean?

We mean that by reading this guide, you¡¯ve taken the most important step

toward giving yourself a solid financial future. You are already making progress.

You¡¯ve started.

When you make a budget, you take the first step toward getting control of your

money so you can build wealth. Without a budget, it¡¯s a lot harder to get through

Dave Ramsey¡¯s seven Baby Steps:

Baby

Step

1

Baby

Step

2

Baby

Step

3

Baby

Step

4

Baby

Step

5

Baby

Step

6

Baby

Step

7

$1,000 starter emergency fund in the bank

Pay off all debts smallest to largest with the debt snowball

Fully funded emergency fund of three to six months of expenses

Invest 15% of pretax income into retirement savings

Invest for kids¡¯ college savings

Pay off the house

Build wealth and give a bunch away

Now let¡¯s get ahold of your money and tell it what to do.

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Introduction

What Is Most Important?

Your biggest wealth-building tool is your

income, and the best way to harness the

power of your income is the monthly

budget. Not investing or saving for college

(though those things are important). It¡¯s

the budget, because from the budget flows

everything else. If you want to invest money

in a mutual fund, you make room for that

$100 or $500 in the monthly budget. Want

to get out of debt? List your debts in your

spending plan. You get the idea.

The sad thing is that lots of people rank a

budget only slightly higher than the Black

Plague. Budgets to them mean no fun, bread

and water for every meal, and custom-fitted

straitjackets. What they don¡¯t realize is

that a spending plan is the fastest way to

wherever you want to go, from simply taking

control of your money to getting out of debt.

Many people don¡¯t make a budget because

they are afraid of what they will find. If

someone has overspent to the point that they

now face a mountain of debt and little or no

savings, they might be shamed into stopping

right there. Don¡¯t fall into that trap.

A Lesson From Hollywood

In the 1996 movie Ransom, Mel Gibson¡¯s

character¡¯s son has been kidnapped (imagine

that kind of emotional turmoil). Before he

goes out to negotiate his son¡¯s release with

a bag of money, an FBI agent gives him

some helpful advice. ¡°This here¡¯s a business

transaction,¡± the FBI agent tells him. ¡°You¡¯re

a businessman; he¡¯s a businessman. This is

business.¡± He¡¯s trying to get Gibson to take

emotion out of the situation so he can think

clearly and do what needs to be done. Give

money. Get son. Simple.

We are not denying the emotion that you

may be feeling. Whether it¡¯s fear, anger,

shame or something else, that feeling is very

real. The right time to apply that emotional

energy is when you have a plan in place.

Put your fear or anger aside long enough

to get the numbers on paper¡ªa business

transaction. Once that¡¯s done, bring your

emotion back and apply that passion and

energy to the plan you¡¯ve made.

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How to Make

a Budget

Y

ou can make a budget any way that

works for you. It might be just a

yellow pad and pen, or maybe it¡¯s

a spreadsheet. You might choose Dave¡¯s

awesome budget forms or our super helpful

Gazelle Budget tool. Pick your favorite.

You must make a new budget for each month.

Every time that calendar flips, there are

new birthdays, holidays, insurance bills, tax

refunds (we¡¯ll talk about that later), gas bills,

proms and so on. There is no such thing as

a ¡°perfect¡± budget that works the same way

every month.

If you are married, do not separate your

incomes. The preacher said, ¡°And now you

are one.¡± That includes your income! You are

working together toward a goal that benefits

both of you, so it doesn¡¯t matter if one of you

nets $1,000 a month and the other brings

home $10,000. You are now an $11,000

household.

If you want to win with money, you¡¯ve got

to do the details. Every month. So let¡¯s get

started.

Income

On one side of the page, list all your income

sources for the month. That includes:

? Paychecks

? Income from a small business

? Side jobs

? Freelance work

? Residual income

? Child support

There may be other nooks and crannies

there that we didn¡¯t cover, but the

overarching rule is this: If you receive money

during the month, write it in your income

category. There¡¯s really no such thing as

¡°found money.¡± If you take it in, you should

write it down.

If you are married, then both of you sit down

when it is time to make the monthly budget

and have a Budget Committee Meeting.

Both of you have input and an equal say.

The person who is more detail-oriented (the

nerd) can take the lead and write down the

numbers, but the more laid-back person

(the free spirit) also has a vote and must

contribute. None of this, ¡°Whatever you want

to do, honey,¡± stuff.

Once the budget is agreed upon, pinkyswear and spit-shake that you¡¯ll stick to it.

By making the spending plan together, you

put your word to doing what¡¯s on the paper.

If you don¡¯t, it¡¯s breaking your word, so don¡¯t

stray from the plan.

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